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I didn't heed your advise (whole splitting junk) and the sales man just lowered the MF to adjust for the FULL reduction of 0.00049. Signed for my car today, I'm happy.

If you got the buy rate MF with no markup you did well...depending on the market a lot of dealers won't give up the buy rate MF...in that case they are usually happy with splitting the difference...or a markup of 0.0002 instead of 0.0004.

i did 10 in 03. My current dealer is just plain obtuse and thinks my use of MSDs hurts them, so I couldn't use them on my e90.

When I told my the F&I guy at my dealer I wanted to do the MSD he looked at like a deer in the headlights...he was completely confused -- and then said he wasn't going to do that. This was after I got them to reduce the MF mark-up from 0.0002 to 0.00005 - I didn't feel like arguing at that point.

Oh, well, I just need to invest the cash I was allocating for the MSD wisely to make-up for it...

Why do many people not recommend putting any multiple security deposits down? They say that it is better I take the money and invest it. My argument is that if you put nothing down, how many people are disciplined enough to invest rather than spening on other things. Also, putting lots of deposits, saves you a whole lof money at the end that I think investing in any mutual fund or stock cannot match. Only problem is if you need the money, can't get it out until the lease end.

Why do many people not recommend putting any multiple security deposits down? They say that it is better I take the money and invest it. My argument is that if you put nothing down, how many people are disciplined enough to invest rather than spening on other things. Also, putting lots of deposits, saves you a whole lof money at the end that I think investing in any mutual fund or stock cannot match. Only problem is if you need the money, can't get it out until the lease end.

Well, if those people are making low teens returns on their money it might be the best way to go...but MSD is a guaranteed 9% or so return...TAX FREE!

I figured that the breakpoint return has to be almost 10%. So that means I need constant 10% returns over 3 years. With an inverted yield curve on T-Bills, only way to get such a return is by investing in stocks or mutuals. Granted the US had a stellar past 3 of performance, but I rather go with the MSD. The MSD is guaranteed, whereas investing in market is not.

I figured that the breakpoint return has to be almost 10%. So that means I need constant 10% returns over 3 years. With an inverted yield curve on T-Bills, only way to get such a return is by investing in stocks or mutuals. Granted the US had a stellar past 3 of performance, but I rather go with the MSD. The MSD is guaranteed, whereas investing in market is not.

Okay, did some more reading...I see that the any promotional rate is anything below the base rate (whatever that is, 0.0022 something or other, I think). I think if you look at all the MF for 2 and 3 year leases for the 5-series, you'll fin 0.00225 pretty prevalent. I think that is considered the base MF. Anything below that would be considered a "promotional" rate.

Unfortunately, from what I can tell, the dealers can say and do whatever they please in regards to how they handle the MSD program. If your dealer won't play ball, find another dealer who will or at least inform your dealer that you will be forced to find another dealer who will.

The Base Rate is the BMWFS base rate 0.00305 or something obnoxiously high. You can take the 0.0008 reduction to anything but the base rate for PRE-PAID leases. The MSD is totally different. Both Chrishcheung and I did MSDs with super-promotional Dec/Jan E60 rates with ED. Things have just gotten better.

My 19.3% was the two year total (or 9.65 per year in simple interest). Sorry to confuse anyone.

Also "carnuts" you are not deducting the Federal & State taxes you will have to pay on your 5% compound interest if you put your $4,900 in the "bank". All the MSD savings are tax free.

All in all as was said a very smart thing if you have the cash.

Disclaimer: I am an accountant, and accountants are notorious for coming up with strange numbers.

I get taxed 5% on security deposits (and monthly payments), so it gets complicated (to me) in determining the benefit of the MSD program. Maybe the feds would ding me more on my earned dividends.

To weigh in giving up cash, I calculate the total deposit to total savings ratio. I get about 22% (e.g., $650 deposits, 36 mos) for 1 deposit up to 7 deposits. So, giving up more cash may not give more bang. If I were to hold on to the cash and earn *compounded* interest, I'd need 7-8% interest rate to earn (compunded over 3 years) as much as I'd save with the MSD program (with up to 7 deposits).

I get taxed 5% on security deposits (and monthly payments), so it gets complicated (to me) in determining the benefit of the MSD program. Maybe the feds would ding me more on my earned dividends.

To weigh in giving up cash, I calculate the total deposit to total savings ratio. I get about 22% (e.g., $650 deposits, 36 mos) for 1 deposit up to 7 deposits. So, giving up more cash may not give more bang. If I were to hold on to the cash and earn *compounded* interest, I'd need 7-8% interest rate to earn (compunded over 3 years) as much as I'd save with the MSD program (with up to 7 deposits).

Tough call...I tend to like cash, though.

How do you get taxed on your MSD? I have never heard of this. It should be tax free, you give them the money to hold for the term to get the MF reduction and get it back when the term ends. No tax.

How do you get taxed on your MSD? I have never heard of this. It should be tax free, you give them the money to hold for the term to get the MF reduction and get it back when the term ends. No tax.

Rules on taxing and leasing vary quite a bit state to state. It pays to know the rules in your state. California is very, very amenable to leasing and so the MSD program is almost a no brainer if you can muster the ca$h.

Rules on taxing and leasing vary quite a bit state to state. It pays to know the rules in your state. California is very, very amenable to leasing and so the MSD program is almost a no brainer if you can muster the ca$h.

I know they do vary (example illinois charging tax on the full negotiated price of the car, not the payment). However I wasn't aware of any state, NM in this case, that taxes you on a security deposit. Can anyone verify this? Illinois doesn't even do this and they are the WORST state to lease in, especially chicago, where you can pay up to 12% tax on the purchase or lease of a vehicle.

If you do in fact get taxed on the security deposit, you can then write off that along with sales tax on the vehicle to accumlate a bigger deduction on local sales tax, vs. the standard deduction for purchases.

I know they do vary (example illinois charging tax on the full negotiated price of the car, not the payment). However I wasn't aware of any state, NM in this case, that taxes you on a security deposit. Can anyone verify this? Illinois doesn't even do this and they are the WORST state to lease in, especially chicago, where you can pay up to 12% tax on the purchase or lease of a vehicle.

If you do in fact get taxed on the security deposit, you can then write off that along with sales tax on the vehicle to accumlate a bigger deduction on local sales tax, vs. the standard deduction for purchases.

Sad, but true. I get taxed on the total up-front fees. When MSD kicks in, it ups the up-fronts and ups the taxes accordingly. Yuk!!